Bitcoin (BTC) is in trouble right now. The benchmark crypto asset closed 6.2% lower on Thursday at $20,360 for the BTC/USDT pair, only to tumble to a two-month low of $19,900 this morning.
For anyone keeping up with the news, the headwinds are no secret: Once-prominent crypto bank Silvergate went into voluntary liquidation on Thursday, followed by fears of a bank run on another tech-friendly institution, Silicone Valley Bank.
Both have been forced to sell huge sums of government bonds at massive losses to prop up dwindling revenues.
The fates of Bitcoin, Silvergate and SVB are intertwined: they all benefit from ultra-loose monetary policy, BTC because investors are more likely to take risks, banks because their primary investments, government bonds, are well priced.
Sounds good when money is cheap, sounds catastrophic when central banks pile on rate hikes.
So the point is that bitcoin’s handsome gains will be phased out in early 2023.
BTC/USDT is down around 11% week-on-week, but for a more bullish analysis we can look at year-to-date performance, which is up 20% at the time of writing.
Losses appear to be leveling off on the hourly chart after bottoming out at $19,776, although increased near-term volatility is far from a foregone conclusion.
Binance’s order book appears to be showing support from some buyers, particularly around $19,800, which is of little help given the whopping $123 million in long bitcoin futures liquidations booked over the past 24 hours.
Bitcoin (BTC), still relevant! – Source: currency.com
Over on Ethereum (ETH), the second-largest cryptoasset saw a 6.2% plunge to $1,440 by Thursday’s close, followed by a further 2% drop to $1,408 this morning for the ETH/USDT pair.
Long ETH liquidations exceeded $83 million in the last 24 hours (for the entire cryptocurrency sector, this number exceeds $320 million).
$1,400 appears to be the entry point according to the Binance order book, but further shockwaves in the market are likely to plunge the ETH/USDT pair lower.
Altcoins led lower
This week’s market woes are also being felt in the altcoin space.
That being said, Ripple (XRP) still remains the only outlier among large caps, in the sense that XRP is the only top-tier altcoin in the green week-over-week.
However, the excitement among investors over a favorable outcome in the SEC case against Ripple Labs does little for companies like BNB, Cardano (ADA), Dogecoin (DOGE), Polkadott (DOT) and Polygon (MATIC), all of which followed Bitcoin and Ether in the latest Tailspin.
HT, the native token of the Huobi crypto exchange, remains at the top of the losers list after falling another 20% overnight.
HT suffered steep declines on Thursday after a high volume of leveraged liquidations sent the token into freefall mode.
Tron blockchain founder and Huobi supporter Justin Sun today announced the formation of a $100 million liquidity fund to stave off future troubles.
We deeply apologize for the impact of the leveraged liquidation on the market caused by some users, and in order to further enhance the multi-currency liquidity of the @HuobiGlobal platform, we will set up a liquidity fund with an investment of $100 million dollars.
— HE Justin Sun 孙伊晨 (@justinsuntron) March 10, 2023
Global crypto market cap tumbled to a two-month low of $927 billion overnight, while total value tied up in decentralized finance (DeFi) plummeted 6% to $44.5 billion.
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